61) When a firm improves the quality and increases the price of a product in reaction to a competitor making a price reduction, the firm is ________.
A) moving its brand into a less competitive position
B) negatively positioning its product
C) moving its brand into a higher price-value position
D) creating a "fighter brand"
E) narrowing its target market
Answer: C
Diff: 3 Page Ref: 327
Skill: Concept
Objective: 11-4
62) A company would most likely consider launching a low-price "fighter brand" in response to a competitor reducing prices if ________.
A) the market segment being lost is price sensitive
B) the market segment being lost is not price sensitive
C) the market segment being lost responds to arguments of higher quality
D) the market segment being lost no longer demands the product
E) the market segment being lost has shifted culturally
Answer: A
Diff: 2 Page Ref: 327
Skill: Concept
Objective: 11-4
63) Price fixing, predatory pricing, retail price maintenance, and deceptive pricing are examples of ________.
A) common pricing policies
B) major public policy issues in pricing
C) ethical pricing strategies
D) pricing policies used mostly in the wholesale sector
E) pricing used mostly in the retail sector
Answer: B
Diff: 1 Page Ref: 328
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
64) The Sherman, Clayton, and Robinson-Patman Acts are all federal laws that were enacted to curb the formation of ________.
A) monopolies
B) oligopolies
C) competitive markets
D) international markets
E) limited partnerships
Answer: A
Diff: 2 Page Ref: 328
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
65) When sellers set prices after talking to competitors and engaging in collusion, they are involved in ________.
A) predatory pricing
B) discriminatory pricing
C) price fixing
D) skimming pricing
E) penetration pricing
Answer: C
Diff: 2 Page Ref: 328
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
66) Federal legislation on price fixing requires that sellers set their prices ________.
A) based on their fixed and variable costs
B) without communication from competitors
C) to achieve a specific profit margin
D) without the intention of cutting into competitors' profits
E) consistently throughout a region
Answer: B
Diff: 2 Page Ref: 328
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
67) If a large retailer sold numerous items below cost with the intention of punishing small competitors and gaining higher long-run profits by putting those competitors out of business, the retailer would be guilty of ________.
A) price collusion
B) price fixing
C) predatory pricing
D) discriminatory pricing
E) penetration pricing
Answer: C
Diff: 2 Page Ref: 330
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
68) Which of the following would most likely be considered predatory pricing?
A) pricing below cost to get rid of a surplus
B) pricing below cost to drive out competitors
C) offering a volume discount
D) offering a suggested retail price on the manufacturer's package
E) offering real-time pricing online
Answer: B
Diff: 2 Page Ref: 331
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
69) The Robinson-Patman Act seeks to prevent unfair ________ by ensuring that sellers offer the same price terms to customers at a given price level.
A) marketing
B) price discrimination
C) dynamic pricing
D) price collusion
E) treatment of small retailers
Answer: B
Diff: 2 Page Ref: 331
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
70) Price discrimination is legal under which of the following conditions?
A) when a manufacturer and reseller have agreed upon a specified retail price for a product
B) when a manufacturer sells to retailers in different markets
C) when a seller can prove its costs are different when selling to different retailers
D) when a seller advertises prices that are not actually available to consumers
E) when a seller has not communicated with competitors before announcing prices
Answer: C
Diff: 3 Page Ref: 331
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
71) Price discrimination may be used to match competition as long as the strategy is temporary, localized, and ________.
A) defensive
B) offensive
C) published
D) private
E) used in all channels
Answer: A
Diff: 3 Page Ref: 331
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
72) Mark's Markers, a manufacturer of color markers, has required its dealers to charge a specified retail price for its markers. Mark's is most likely guilty of ________.
A) price fixing
B) retail price maintenance
C) price discrimination
D) price collusion
E) unfair price skimming
Answer: B
Diff: 2 Page Ref: 331
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
73) ________ results when a company uses pricing methods that make it difficult for consumers to understand just what price they are really paying.
A) Comparison pricing
B) Skimming pricing
C) Price confusion
D) Predatory pricing
E) Price collusion
Answer: C
Diff: 2 Page Ref: 332
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
74) Failure to enter the current price into a retailer's system may result in charges of ________.
A) predatory pricing
B) scanner fraud
C) retail maintenance pricing
D) discriminatory pricing
E) price fixing
Answer: B
Diff: 2 Page Ref: 332
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
75) Comparison pricing claims are legal if they are truthful. However, sellers should not advertise a price reduction unless ________.
A) it is a saving from the usual retail price
B) a "factory" price, if listed, is what it is claimed to be
C) a "wholesale" price, if listed, is what it is claimed to be
D) "comparable value items" are not actually imperfect goods
E) all of the above
Answer: E
Diff: 2 Page Ref: 331
AACSB: Ethical Understanding and Reasoning Abilities
Skill: Concept
Objective: 11-5
76) Valeo Fashions has just introduced a new line of fashion dresses for teens. It will initially enter the market at high prices in a ________ pricing strategy.
A) market-penetration
B) market-skimming
C) competitive market
D) psychological
E) demographic
Answer: B
Diff: 2 Page Ref: 314
AACSB: Analytic Skills
Skill: Application
Objective: 11-1
77) When Pepsi came out with Pepsi Blue and priced it at half price to attract buyers, Pepsi was using ________.
A) market-skimming pricing
B) market-penetration pricing
C) new-product pricing
D) discount pricing
E) value-added pricing
Answer: B
Diff: 2 Page Ref: 314
AACSB: Analytic Skills
Skill: Application
Objective: 11-1
78) Johnson Boats wants to introduce a new model of boat into mature markets in highly developed countries with the goal of quickly gaining mass-market share. As a consultant, you should recommend a ________ pricing strategy.
A) market-skimming
B) market-penetration
C) zone
D) loss-leader
E) captive-product
Answer: B
Diff: 2 Page Ref: 314-315
AACSB: Reflective Thinking Skills
Skill: Application
Objective: 11-1
79) When Circuit Town Electronics sets its televisions at three price levels of $699, $899, and $1,099, it is using ________.
A) product line pricing
B) market-skimming pricing
C) market-penetration pricing
D) break-even pricing
E) target return pricing
Answer: A
Diff: 2 Page Ref: 315
AACSB: Analytic Skills
Skill: Application
Objective: 11-2
80) When Polaroid set the general price range of its cameras low and the markup on its film high, it was practicing ________.
A) market-penetration pricing
B) market-skimming pricing
C) product line pricing
D) captive product pricing
E) price bundling
Answer: D
Diff: 2 Page Ref: 316
AACSB: Analytic Skills
Skill: Application
Objective: 11-2
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